The Dark Side of the Cloud: IBM Partner Gives Folks Two Weeks to Move Data

This week, the word is that cloud storage company Nirvanix — the outfit behind IBM’s SmartCloud Storage service — will soon shut down its online service, giving its customers just two weeks to move their data.

Both Nirvanix and IBM remain tight-lipped about the claims, but Steve Ampleford, CEO of Aorta Cloud, a Nirvanix partner, says he heard the news directly from his representative at Nirvanix. “I got a late afternoon phone call on Monday to explain Nirvanix had failed its latest funding round,” he says. “And having failed in all of its other options, they told sales people to notify customers and partners.”

According to Ampleford, customers must migrate their data from Nirvanix by the end of September. After that, the service may no longer be available.

Cloud services such as Nirvanix promise a new kind of convenience. They give you instant access to processing power and storage, and you don’t have to setup your own computer servers and other gear. But there are risks involved. You lose a certain about of control over your data, and if your provider goes out of business, you may be in a pickle.

The Nirvanix situation was first reported on Tuesday by Information Age. Nirvanix hasn’t responded to our requests for comment, updated its website, or made any other announcement about its storage service, and as of now, it’s still possible to sign-up for a new account through the company’s website.

‘I got a late afternoon phone call on Monday to explain Nirvanix had failed its latest funding round. And having failed in all of its other options, they told sales people to notify customers and partners’

— Steve Ampleford

IBM, which has partnered with Nirvanix since 2011, hasn’t announced whether this will affect its SmartCloud service and hasn’t responded to our request for comment.

Aorta Cloud sells the Nirvanix service along with an extra security layer designed for companies and organizations with stringent data governance requirements, such as financial houses, health care companies, and government agencies. Ampleford says that Aorta Cloud has contingency plans for its customers, but he can’t help other Nirvanix users.

He says that some of the larger Nirvanix customers are storing between 10 and 20 petabytes of data, which would be difficult to migrate within two weeks. “It would be difficult to download that much data in that amount of time, let alone identify an alternative, negotiate a contract, upload your data and update your infrastructure,” he says.

In an attempt to help customers affected by the looming shut down, Aorta Cloud has announced, in an open letter, that it would like to acquire Nirvanix and keep it running. Ampleford says the company has committed seven figures to such a deal and that a bank is ready to match that investment.

“The customers are going to struggle regardless, but there must be a way to continue this to, if nothing else, make a smoother exit,” he says.

Despite the impending shutdown, he’s still bullish on Nirvanix. “The technology is good, the people are good, the demand is obviously there. The patents that Nirvanix have are quite compelling,” he says. “That hasn’t changed, fundamentally. The technology, support and infrastructure is a compelling argument.”

Nirvanix has been around for six years and raised $70 million dollars — $25 million of which arrived just last year. It has a partnership with no less than IBM, and IT analyst firms like Gartner and the 451 Group have praised the cloud storage company for technical expertise. But if this company is so great, why the struggle to stay open?

Well, there’s been trouble brewing under the service for years. The company was founded in 2007 as StreamLoad, but soon split into two different outfits: Nirvanix, which focused on business customers, and MediaMax, which targeted consumers. In 2008, MediaMax, which had changed its name to The Linkup, lost an unspecified amount of customer data before shuttering on short notice. Nirvanix denied any responsibility for LinkUp’s data loss in a blog post, according to NetworkWorld.

The company has also struggled with leadership. It has had five CEOs since 2008, and three in the past year, according to CRN. The most recent is Debra Chrapaty, former CIO of online gaming company Zynga — a company with many problems of its own — who joined the company last March.

Another oft-cited issue is the cost of building and maintaining storage infrastructure suited for use by large businesses. If true, enterprises may want to cast a skeptical eye on other venture-backed storage companies like Box and Dropbox.

“Our ongoing testing of public cloud storage providers show that, right now, there are only two that meet enterprise standards for reliability and performance: Amazon S3 and Microsoft Azure,” says Andres Rodriguez, CEO of cloud storage company Nasuni. “And even with these two providers, we’ve developed backstops like cloud mirroring in case of failure. Cloud storage is definitely enterprise-ready, but only if you use an enterprise-ready service.”